Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

Dr. Reddy's Laboratories / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dr-reddy-s-laboratories-ltd" target="_blank" data-smartkarma-citation="entities:16406:1" rel="noopener">Dr. Reddy's Laboratories (DRRD IN)</a> reported Q3FY25 US business revenue of INR33.8B, up 1% YoY, mainly dragged by lower contribution from Lenalidomide. Q3FY25 EBITDA margin deteriorated to 27.5% (Q3FY24: 29.3%).</li>
<li>Limited growth catalysts remain major overhang. No near-term key launches lined-up to fill the void created by Lenalidomide. Moreover, paltry new launches in the U.S. entail limited revenue visibility.</li>
<li>Lack of near-term catalyst and bleak growth outlook justify cheaper valuation of Dr. Reddy’s. We do not consider Dr. Reddy’s as value buying opportunity and remain bearish on the name.</li>
</ul>



Dr. Reddy's Laboratories (DRRD IN) reported Q3FY25 US business revenue of INR33.8B, up 1% YoY, mainly dragged by lower contribution from Lenalidomide. Q3FY25 EBITDA margin deteriorated to 27.5% (Q3FY24: 29.3%).
Limited growth catalysts remain major overhang. No near-term key launches lined-up to fill the void created by Lenalidomide. Moreover, paltry new launches in the U.S. entail limited revenue visibility.
Lack of near-term catalyst and bleak growth outlook justify cheaper valuation of Dr. Reddy’s. We do not consider Dr. Reddy’s as value buying opportunity and remain bearish on the name.


Dr. Reddy's Laboratories (DRRD IN): Q3FY25 Result- Subdued US Business Dents Margin; Somber Outlook

Thematic (Sector/Industry)

<ul>
<li>Eisai is eyeing for Leqembi global revenue of ¥250–280B in FY28. Kaken Pharmaceutical inlicensed dermatology drug candidate from Alumis. Kaken’s onychomycosis drug got approval in Italy.</li>
<li>Mochida Pharmaceutical has applied for marketing approval of Actembra biosimilar in Japan. Shionogi has filed for indication expansion of Xocova for post-exposure prophylaxis of COVID-19 in Japan.</li>
<li>SK Bioscience got approval for Phase 3 clinical trial of 21-valent pneumococcal vaccine in European countries. PharmaEssential obtained approval for Phase 3 clinical trial of Ropeginterferon alfa-2b in China.</li>
</ul>


Eisai is eyeing for Leqembi global revenue of ¥250–280B in FY28. Kaken Pharmaceutical inlicensed dermatology drug candidate from Alumis. Kaken’s onychomycosis drug got approval in Italy.
Mochida Pharmaceutical has applied for marketing approval of Actembra biosimilar in Japan. Shionogi has filed for indication expansion of Xocova for post-exposure prophylaxis of COVID-19 in Japan.
SK Bioscience got approval for Phase 3 clinical trial of 21-valent pneumococcal vaccine in European countries. PharmaEssential obtained approval for Phase 3 clinical trial of Ropeginterferon alfa-2b in China.


APAC Healthcare Weekly (Mar 30)- Eisai, Kaken, Mochida, Shionogi, SK Bioscience, PharmaEssentia

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

Dr. Reddy's Laboratories / Index Rebalance

<ul>
<li>NIFTY 50 represents the 50 largest stocks listed in the National Stock Exchange (NSE) of India and the NIFTY Next 50 index tracks the next 50 largest names.</li>
<li>With three more trading days left in the reference period, we are presenting our final  expectations for ADDs and DELs for the September 2024 index rebal event.</li>
<li>We see five changes for the NIFTY 100 index which will also affect the NIFTY Next 50 index. There could also be multiple changes for the NIFTY 50 index.</li>
</ul>


NIFTY 50 represents the 50 largest stocks listed in the National Stock Exchange (NSE) of India and the NIFTY Next 50 index tracks the next 50 largest names.
With three more trading days left in the reference period, we are presenting our final  expectations for ADDs and DELs for the September 2024 index rebal event.
We see five changes for the NIFTY 100 index which will also affect the NIFTY Next 50 index. There could also be multiple changes for the NIFTY 50 index.


Quiddity Leaderboard NIFTY Sep 24: Final Expectations; Trades Perform Positively; New Ideas

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dr-reddy-s-laboratories-ltd" target="_blank" data-smartkarma-citation="entities:16406:1" rel="noopener">Dr. Reddy's Laboratories (DRRD IN)</a> had a good start to FY25, with a record high quarterly revenue of INR77B in Q1FY25, beating estimates.</li>
<li>Increase in base business volume in the U.S. and revenue from Sanofi’s vaccine portfolio in India drove the revenue growth. Higher opex and effective tax rate impacted bottom line.</li>
<li>The company will split its shares in the ratio of 1:5. This will be first time in last 20 years the company will be splitting its stocks.  </li>
</ul>



Dr. Reddy's Laboratories (DRRD IN) had a good start to FY25, with a record high quarterly revenue of INR77B in Q1FY25, beating estimates.
Increase in base business volume in the U.S. and revenue from Sanofi’s vaccine portfolio in India drove the revenue growth. Higher opex and effective tax rate impacted bottom line.
The company will split its shares in the ratio of 1:5. This will be first time in last 20 years the company will be splitting its stocks.  


Dr. Reddy's Laboratories (DRRD IN): US and India Drive Q1FY25 Result; Announces 1:5 Stock Split

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dr-reddy-s-laboratories-ltd" target="_blank" data-smartkarma-citation="entities:16406:1" rel="noopener">Dr. Reddy's Laboratories (DRRD IN)</a> has signed a definitive agreement with <a href="https://www.smartkarma.com/entities/haleon-plc" target="_blank" data-smartkarma-citation="entities:36122:1" rel="noopener">Haleon (HLN LN)</a> to acquire latter’s global portfolio of consumer healthcare brands in the nicotine replacement therapy outside US.</li>
<li>The company will acquire the portfolio for a total consideration of £500M ($633M). In 2023, the portfolio generated ~£217M ($274M) revenue. Purchase consideration values the business at EV/sales of 2.3x.</li>
<li>The acquisition will not stretch the balance sheet as Dr. Reddy’s has a cash balance of $990M as on March 31, 2024. The transaction is expected to complete in 4Q24.</li>
</ul>



Dr. Reddy's Laboratories (DRRD IN) has signed a definitive agreement with Haleon (HLN LN) to acquire latter’s global portfolio of consumer healthcare brands in the nicotine replacement therapy outside US.
The company will acquire the portfolio for a total consideration of £500M ($633M). In 2023, the portfolio generated ~£217M ($274M) revenue. Purchase consideration values the business at EV/sales of 2.3x.
The acquisition will not stretch the balance sheet as Dr. Reddy’s has a cash balance of $990M as on March 31, 2024. The transaction is expected to complete in 4Q24.


Dr. Reddy's Laboratories (DRRD IN): Nicotinell Acquisition to Fortify Consumer Healthcare Business

India

Dr. Reddy's Laboratories Limited provides a complete range of pharmaceutical services. The Company manufactures bulk drugs and formulations including verapamil and cephalexin. The Company also manufactures and exports molecules such as norfloxacin, ciprofloxacin, and varieties of semi-synthetic penicillin. The Company markets its products in India and around the world.

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Dr. Reddy's Laboratories (DRRD IN)